Farm Economics - The Pig Lesson

Ernie · #61 12/12/07, 12:42 PM

Ah, but there's the rub, isn't it?

These are thick cut pork chops I bought from a man who runs a local market less than 10 miles from my house. I know him and he knows me and I get a better cut of meat because of it. The pigs he buys from local farmers that he knows, and they buy their grain from local producers THEY know. So everything in this whole cycle of this pig was local to me. That cost more, but these guys who I gave money to for the chops who paid my money to the farmer who raised the pig who paid money to the grain producers all live in my community ... and come next year they'll be giving me BACK some of my money for vegetables, goat milk, and honey.

If I bought my pork chops at Walmart it's cheaper, but then my money goes off to Bentonville, Arkansas and wherever-in-the-heck they got their pigs from. Mr. Butcher, Mr. Pig Farmer, and Mr. Corn grower then won't have their cut of that $5.99 per pound in order to buy MY goods.

If I want to earn a living wage from farming, then I have to expect to PAY a living wage to other farmers. Don't I?

Goatguy · #62 12/12/07, 12:56 PM

I dont' think labor should be factored into the equation at all. Labor one place does not equal the same "time" labor in another place. Thats the whole reason that some jobs pay more than others. Anyhow, I would MUCH rather spend 33 hours feeding, chasing, petting my own pigs, than 33 hours at any other minimum wage job like fast food, pushing snow around, or stocking shelves.

Comparing the labor doesn't really count if its labor we enjoy vs. labor we don't enjoy

stanb999 · #63 12/12/07, 02:03 PM

Quote:

Originally Posted by Ernie

Awhile back, a poster argued that we cannot raise our own food cheaper than we can buy it. Arguments ensued. Illusions were trampled. Emotional fingers were slammed in the car doors of logic. In this post, I aim to revisit this argument, though in a slightly different way. I want to break down the simple economics of homesteading life, if done precisely and efficiently, and see if we can't uncover the truth.

Because I don't have pigs of my own, I just went to the local meat market and picked up some pork chops for tonight's dinner. It's not a corporate chain, so the price is a little higher. I paid $5.99 per pound for some butterfly pork chops. I'll round down for the purposes of math and say that I bought 8 pounds for a total price of $47.92, then a 6% sales tax which brought me to about $50.79 for a total. (The government collected a whopping $2.87 on this transaction for educating children, keeping the highways free of banditry, and for securing our national borders.)

Illinois minimum wage (which is what I'd get paid if I did all this farm labor for someone else) is $7.50 an hour. For my $50.79, I had to work about 6 hours and 45 minutes. Tonight's dinner, for a family of 6, is costing me almost a full day's salary. That's not counting yet the potatoes I've got to peel and cut in order to boil and mash for a side dish.

Now let's say I bought a feeder pig in St Paul come spring. I'll pay roughly $50 (commodity prices vary widely, but I'm taking an average here) for a 35 pound, 8 week old feeder pig. In order to get our baby pig up to a decent eating weight (estimated 240 pounds), we've got to feed him 2 pounds of corn per day, or its energy equivalent. Ours is a household that produces lots of table scraps (small children are wasteful regardless of how hard you try) and so those go into a bucket by the back door for the pig. He also gets garden waste all summer consisting of potatoes I hit with the spade, carrot tops and greens, etc. When I slaughter chickens he gets the scraps and offal. He gets the milk when the goat puts her nasty manure-covered hoof into the bucket. On a diversified family homestead like ours, this pig will get 80% of his nutrition from what would otherwise be considered waste. Now according to the Illinois county extension office, a pig's total corn consumption from feeder pig stage to a 240 pound finishing pig is 530 pounds of corn. Remember, 80% of his nutrition came from other things, so that left me feeding 20% of his ration in corn, which is 106 pounds of corn. At about $0.51 per pound (darn ethanol driving the costs up), this pig will require $54.06 more money for his ration cost. That brings us up to a total of $104.06 for the price of this pig over his 4 month (120 day) stay with us.

His housing cost me nothing ... I used scrap lumber to build a pen. For labor, estimate 3 hours of time in the beginning to go pick out the feeder pig and return to the farm with him. Then there's about 15 minutes per day of dumping food in his trough and making sure he has water. Since that doesn't always take 15 minutes per day, add in the additional time for things such as taking his temperature, scratching him behind the ears, or that one day when someone left the gate open and we had to chase him across the pasture. At the end of this, I've got 33 man hours of labor into this pig. (The bulk of that was the 15 minutes per day over 120 days, though it was accomplished by my 11 year old son who would not be able to get a job outside of our farm.)

So when it's time to slaughter, you'll return about 70% of the pig's weight in actual meat. We butchered him at 240 pounds exactly, so that's 168 pounds of meat. Not all of that is beautiful butterflied pork chops (plenty of sausage and such) but you can see my cost per pound, not including processing costs because I couldn't find a reliable source for that.

Cost of pig + pig food - $104.06
Cost of labor at minimum wage - $247.50
Total cost of pig - $351.56
Price of pork per pound for 168 pounds - $2.09

Now it breaks down a little differently and it's not comparing apples to apples, but $2.09 is a bargain by any standard. I'll get pork chops, bacon, some pork roasts, and plenty of sausage out of all of that. No matter what the cut of meat ... it's still only $2.09 per pound.

For 120 days worth of work, you can see that the pig experiment was worthwhile economically. At the minimum wage salary, it would have taken me many more hours of labor to earn enough for 168 pounds of pork, whereas raising one myself was profitable and worthwhile. Even more so because much of the labor was unemployable elsewhere ... my 11 year old son providing the bulk of the feeding time. (Some would say that I'm somewhat unemployable due to temperament, but that's another post at another time.)

Does this put a little more meat into the argument?

First the feed #'s are way off.
Here I can buy 20% hog ration for .13 cents.
Feeder price is pretty go tho.

So to raise a hog from 30 lbs to 230. requires 600 lbs of feed.

Now it takes about 2 min. a day to feed and water per pig. (I keep 5 or so. So it's 10 min. per day for all. So over 100 days it's 200 min. or a little over 3 hours.

Come killing time I process myself. So time is about 5 hours. (2 to kill and hang) 3 to process.

So the cost of a hog on a homestead is..........

Return in lbs of meat is about 60% in commercial cuts. or 130lbs

Retail meat prices for discounted pork is about 2.00 a pound.

So the retail value of your produce is 260.00.

8.33 hours labor.
feed cost 78.00
Cost of feeder pig. 50.00

So 260.00
- costs 128.00
-------------------
Amount "profit" before labor 132.00 or 10% profit and an hourly rate of $14.26

This example excludes any "free" feed as the time required to obtain it exceeds the profitability of it.

fantasymaker · #64 12/12/07, 02:55 PM

Ok How about this for an equation.
10 pigs total cost $200
Put on 64 acres of harvested corn field.
total feed cost 0
$5 fuel to takem to market.
64 acres now cleaner of volunteer corn
say around $10 an acre in value
9 pigs sold for $120 each
Total $1080
+ $640 in additional value of the cleaner field
Total$1720
-$5 fuel
leaves $1715
-$200 for pigs
leaves $1515
That I was paid to eat the 120 pounds of pork from the pig I kept.

So I got paid $12 a pound to eat!

farmergirl · #65 12/12/07, 03:32 PM

Quote:

Originally Posted by Cornhusker

Pigs will convert corn at about 3-1, so to get a 40 pound pig to 240 will take about 600 pounds of corn.
4 months is about right to finish a pig.
It depends on the pigs of course, some will fill out a little faster, some slower.
If you are going to sell a pig commercially, to the sale barn, whatever, you'll lose money unless you have a really cheap feed source.
Selling packaged pork is the only way to make money on a small scale as far as i can see.

This reminds me of something...a older neighbor of mine tells of how years ago hogs were raised on nothing but shelled corn. Today hogs are routinely fed corn AND soybeans, which are very high in protein. I figure the shell corn at about 7-8% protein. My hogs eat a blend of corn, soybeans, vitamins/ minerals and molasses, which is a 14% blend, but costs me considerably more than simple shell corn does. Could I feed them nothing but grass and shell corn and still get them to finish weight in the same time?

kritterwood · #66 12/12/07, 03:37 PM

Hey! I Like Them Numbers!!!

mpillow · #67 12/12/07, 06:02 PM

Quote:

Originally Posted by farmergirl

This reminds me of something...a older neighbor of mine tells of how years ago hogs were raised on nothing but shelled corn. Today hogs are routinely fed corn AND soybeans, which are very high in protein. I figure the shell corn at about 7-8% protein. My hogs eat a blend of corn, soybeans, vitamins/ minerals and molasses, which is a 14% blend, but costs me considerably more than simple shell corn does. Could I feed them nothing but grass and shell corn and still get them to finish weight in the same time?

You need higher protein when they are young to about 150-175# then you can cut back. We feed 16% because its cold here( like zero) and the pigs are pretty much out in it. It also depends what your supplements are.

ours like the grass clippings and chickweed and lambsquarter out of the garden.

fantasymaker · #68 12/12/07, 06:20 PM

Quote:

Originally Posted by farmergirl

This reminds me of something...a older neighbor of mine tells of how years ago hogs were raised on nothing but shelled corn. Today hogs are routinely fed corn AND soybeans, which are very high in protein. I figure the shell corn at about 7-8% protein. My hogs eat a blend of corn, soybeans, vitamins/ minerals and molasses, which is a 14% blend, but costs me considerably more than simple shell corn does. Could I feed them nothing but grass and shell corn and still get them to finish weight in the same time?

The time would be a LOT longer and you would need a LOT more corn but if they have access to pasture and can root around they will add a lot of protein to thier own diet with snails snakes bugs roots acorns mice alfalfa etc .

ihedrick · #69 12/12/07, 07:01 PM

I had one butchered last week for someone and it cost $30 to kill, and .33 cent/pound to cut and wrap. At the auctions, I've seen the full size porkers 200 pounds and up going for $100 or less. But then I think about what may have went into those hogs and am happy with my little porkers who ate grains and veggies all summer.

haypoint · #70 12/12/07, 07:09 PM

Having hogs on a picked corn field is a good cheap way to feed them. However, harvested corn fields are seldom fenced and only provide feed late in the season. You would have a hard time in most corn belt areas keeping hogs from 30 pound feeders to 230 pound finished hogs just on a picked corn field. Timing would be critical. You couldn't get your pigs until after the corn is picked, right? Without supplements, it'll take more than 4 months to get that amount of gain. Say the corn is picked in October, do you live where they'd still be fattening in February?
$20 feeder pigs is cheaper than I've seen in quite awhile. More like $40 or 50 each. $5 in fuel to get ten mature hogs to market? You are talking over a ton of hogs, right? Doubt they'd all fit in your Kia. You'll run more than $5 in gas thru your ORV just rounding them up from that corn field.
Once you add fencing costs and getting water to them for the two months that the field isn't deep in snow, you still have to feed them in January and February, the months that they are the largest and hungriest. Unless you feed them consentrate for two months and then put them in the picked field.
The figures you have look like the ones beginning farmers bring to the bank to show they can pay back a loan, a couple years before their big farm auction.

Ernie · #71 12/12/07, 07:42 PM

Wow, Haypoint. That's pretty sour.

Sounds like there's lots of homesteaders making this work with a couple of pigs, and a lot of hog farmers who are bitter about going out of business.

That's been my experience in general with homesteading. Other homesteaders get it. "Professional" farmers look down their noses at the folks with a diversified farm. Only without their corporate welfare in the form of corn subsidies, stolen from the pockets of the homesteaders by graft-fat politicians, many of the "professional" farmers would be on food stamps because they can't eat out of their 2000 acres of high-fructose corn syrup.

A guy down the road from me raises sheep. I went to ask him awhile back about selling wool and the cost of producing it. He's got about 400 sheep crammed on a 3 acre mud lot. He tried to sell me a bunch of his sheep, and then laughed at me when I told him I was only looking for a couple. He told me, "you'll go broke trying to sell wool from only a couple of sheep!" Then he lowered the price of the sheep he was trying to sell me and made another pitch. When I wouldn't buy any of the sickly things, he made disparaging comments much like yours about "hobby farmers". Joke is on him. I've got the wool sold to a local store where yarn spinners like to shop, and I haven't even laid hands on the sheep yet. That's whatever wool is left over after me and my boys have been outfitted with some nice socks and sweaters.

That's the difference between homesteaders and professional farmers that I've seen. Homesteaders find a way to make it profitable. Professional farmers call the bank and ask for more money when they can't make their tractor payment.

ihedrick · #72 12/12/07, 07:59 PM

This is were my motto comes into play. "Were there's a will there's a way; and I will". I've had enough people tell me I couldn't raise goats, sheep, pigs, and calves. But by golly there's 24 goats, 4 sheep, down to 6 hogs, and 4 calves that "couldn't be done". And the ones before them sure were tasty!

DaleK · #73 12/12/07, 08:16 PM

I find a lot of the homesteaders here try to rationalize themselves into profitability instead of actually being profitable. Things like "Well, I'd own the tractor anyway, so it doesn't REALLY cost me any more to run it for a few more hours" Yes it does. Fact is, the vast majority of homesteaders, while claiming to be able to do things at a profit, are subsidizing themselves with off-farm income and they're only fooling themselves.

pancho · #74 12/12/07, 08:32 PM

There is a lot of difference in the homesteader that raises a hog or two for his own use and the farmer who is trying to make a living raising hogs. The homesteader usually has a job other than raising hogs. He doesn't have to make a profit. The benefit he gets is the meat he knows that was grown like he wants it to be raised. The farmer's livelyhood depends on whether he makes a profit or not. Also a lot of difference in finding cheap food for a couple of hogs compared to feeding several hundred or thousands.

RichieC · #75 12/12/07, 08:49 PM

Quote:

Originally Posted by DaleK

I find a lot of the homesteaders here try to rationalize themselves into profitability instead of actually being profitable. Things like "Well, I'd own the tractor anyway, so it doesn't REALLY cost me any more to run it for a few more hours" Yes it does. Fact is, the vast majority of homesteaders, while claiming to be able to do things at a profit, are subsidizing themselves with off-farm income and they're only fooling themselves.

Exactly right.

Ed Norman · #76 12/12/07, 09:12 PM

Quote:

Originally Posted by ihedrick

This is were my motto comes into play. "Were there's a will there's a way; and I will".

I find a lot of truth in my motto: "Where there's a will, there's a won't." I just ignore the won'ts and go about my business.

Ernie · #77 12/12/07, 09:38 PM

Wait a sec ... are you implying that homesteading is only profitable because we're subsidized with off-farm income?

We've come a long way from a simple pig equation to this. However, I don't think you could be more wrong. Some homesteaders may be doing it that way, but you're painting with a pretty broad brush.

On my farm, each project is compartmentalized. Sure, it gets a starting stake from my off-farm income, but there's not a farmer out there, professional or otherwise, who didn't get a starting stake from SOMEWHERE. It was a land inheritance, crop subsidies, or a bank loan that got each and every farmer in existence today started. Nobody just grew out of the soil like a tomato plant, despite what some of you seem to believe.

So with each project being compartmentalized, I keep detailed records on costs and earnings. For example, the tomato plants I grew were sold back to the family at the same cost for organic tomatoes. Cost of the plants ... $12. Total yield 30.71 pounds. At the time, Whole Foods was charging $4.69 per 16 oz and that brought me $144.04 in PROFIT on my tomato plants. I didn't sell a single tomato, but I didn't BUY 30.71 pounds of tomatoes either ... we ate them. The basic economic principle I'm operating on is money saved is the same as money earned. No, I didn't figure in labor on the tomatoes because gardening is my passion. I don't watch television or play video games ... I dig in the dirt. No need to pay me for that. I'd do it for free.

Could I grow 3 acres of tomatoes and still make the same profit ratio? No. I don't expect to. But neither could the professionals if they didn't hire illegal labor and get tax breaks and government subsidies. Oh, and don't forget that it was ME who paid THEM money to be my competitor when the politicians tax me and then give to them. There's no clearer case of out and out theft than farm subsidies today.

I paid $200 for two beehives. I netted $238.63 from the honey. Only one hive produced. The apple trees cost me $240 and will take 5 years before I see any profit on them, but I can wait. I like apples too. The only thing I LOST money on this year was the goats, and that's my own fault. I wasn't diligent about milking them, so far too much profit went to waste. I didn't keep track of my feed expense (you have to feed goats?) but I paid $250 for 4 goats. I collected $130 worth of fresh goat milk. The goats will pay for themselves next year if none of them die this winter. The chickens didn't pay for themselves either. Raccoons slaughtered most of them before they started to lay. However the 4 hens that survived to lay dropped over a 120 eggs before I closed the books in October. That's worth the $60 I had invested in them.

Sure, the farm doesn't pay the mortgage. My off-farm job pays that, but the way I see it ... I'm either paying rent or mortgage somewhere and if I'm going to pay mortgage, might as well be on a farm. I earned over $2000 for the farm this year selling food back to myself at grocery store prices. That's $2000 that the grocery store didn't get. The compartments that didn't yield a profit were either covered by the compartments that did, or they were long term investments that we don't expect to pay off in the first year. So let's go back to my mantra ... [/I]money saved is the same as money earned.[I] I think that's the basic principle of homesteading, whereas the basic principle of professional farming seems to be "get big or get out".

I'll tell you, there's a lot of very large, very professional farmers in my county that didn't see $2000 profit on their farms this year. Many of them won't be farmers in the next 5 years if they don't wake up and diversify.

Cornhusker · #78 12/12/07, 10:11 PM

Quote:

Originally Posted by farmergirl

This reminds me of something...a older neighbor of mine tells of how years ago hogs were raised on nothing but shelled corn. Today hogs are routinely fed corn AND soybeans, which are very high in protein. I figure the shell corn at about 7-8% protein. My hogs eat a blend of corn, soybeans, vitamins/ minerals and molasses, which is a 14% blend, but costs me considerably more than simple shell corn does. Could I feed them nothing but grass and shell corn and still get them to finish weight in the same time?

To grow one that fast, you have to add protein.
most feed mills will mix it in for you.
I'm not sure what it costs these days, back when I was doing it, it wan't too bad to pay the extra.
I really wish I could remember the cost.
Seems like we ran 16% then cut back to 14 or 12 as they got closer to kill weight.

Holdem3x · #79 12/12/07, 11:40 PM

My wifes grandfather went to a sale barn this year to get some pigs to grow out for several friends of his that wanted to buy freezer pork from him since he had raised hogs for them before. A group of 122 head came through at the end of the sale and nobody bid on them because there were so many.He ended up buying them all for $7.00 a head or $854.00 total.He lost two of them leaving 120 head.

Average amount of feed per pig came out to 672 pounds (40.32 tons total) to get them to an average market weight of 240 pounds.This gave him about 28800 pounds of live weight in roughly 120 days.He bought all of his feed at a local mill for about $220.00 a ton for a total of $8870.40.He sold a bunch of the hogs to his friends but most went to the Tyson meat packing plant. He averaged a sale price of 0.52 cents per pound giving him $14,976.00.So his total costs were $9724.40 leaving a profit of $5251.60.

I think he bought around a hundred bales of straw for bedding @ $2.00 each and his water is from a well so we can take off the $51.60 for electricity leaving $5000.00 profit.He spent probably 2 hours a day for 120 days taking care of them.He could have probably have done it in half of that time but he is retired and likes to piddle around with them.Anyway at 240 hours he made about $20.00 an hour for his time.About $280.00 a week.Not bad money for a couple hours a day.

I thought he was crazy when he bought them but he knew the market price was rising at the time and he proved me wrong. This is on a bit of a larger scale but it does show that if you keep an eye on the market price cycles and find cheap to reasonable priced feeder pigs you can raise them cheaper yourself or make a profit.Even when you buy all of their feed and at a fairly high price.Bottom line is he made more $ per head than it cost him to raise them and even if he would have paid a butcher $75.00 to process only one of them it would have still been cheaper than store bought.

stanb999 · #80 12/13/07, 06:52 AM

Quote:

Originally Posted by Ernie

Wait a sec ... are you implying that homesteading is only profitable because we're subsidized with off-farm income?

We've come a long way from a simple pig equation to this. However, I don't think you could be more wrong. Some homesteaders may be doing it that way, but you're painting with a pretty broad brush.

On my farm, each project is compartmentalized. Sure, it gets a starting stake from my off-farm income, but there's not a farmer out there, professional or otherwise, who didn't get a starting stake from SOMEWHERE. It was a land inheritance, crop subsidies, or a bank loan that got each and every farmer in existence today started. Nobody just grew out of the soil like a tomato plant, despite what some of you seem to believe.

So with each project being compartmentalized, I keep detailed records on costs and earnings. For example, the tomato plants I grew were sold back to the family at the same cost for organic tomatoes. Cost of the plants ... $12. Total yield 30.71 pounds. At the time, Whole Foods was charging $4.69 per 16 oz and that brought me $144.04 in PROFIT on my tomato plants. I didn't sell a single tomato, but I didn't BUY 30.71 pounds of tomatoes either ... we ate them. The basic economic principle I'm operating on is money saved is the same as money earned. No, I didn't figure in labor on the tomatoes because gardening is my passion. I don't watch television or play video games ... I dig in the dirt. No need to pay me for that. I'd do it for free.

Could I grow 3 acres of tomatoes and still make the same profit ratio? No. I don't expect to. But neither could the professionals if they didn't hire illegal labor and get tax breaks and government subsidies. Oh, and don't forget that it was ME who paid THEM money to be my competitor when the politicians tax me and then give to them. There's no clearer case of out and out theft than farm subsidies today.

I paid $200 for two beehives. I netted $238.63 from the honey. Only one hive produced. The apple trees cost me $240 and will take 5 years before I see any profit on them, but I can wait. I like apples too. The only thing I LOST money on this year was the goats, and that's my own fault. I wasn't diligent about milking them, so far too much profit went to waste. I didn't keep track of my feed expense (you have to feed goats?) but I paid $250 for 4 goats. I collected $130 worth of fresh goat milk. The goats will pay for themselves next year if none of them die this winter. The chickens didn't pay for themselves either. Raccoons slaughtered most of them before they started to lay. However the 4 hens that survived to lay dropped over a 120 eggs before I closed the books in October. That's worth the $60 I had invested in them.

Sure, the farm doesn't pay the mortgage. My off-farm job pays that, but the way I see it ... I'm either paying rent or mortgage somewhere and if I'm going to pay mortgage, might as well be on a farm. I earned over $2000 for the farm this year selling food back to myself at grocery store prices. That's $2000 that the grocery store didn't get. The compartments that didn't yield a profit were either covered by the compartments that did, or they were long term investments that we don't expect to pay off in the first year. So let's go back to my mantra ... [/I]money saved is the same as money earned.[I] I think that's the basic principle of homesteading, whereas the basic principle of professional farming seems to be "get big or get out".

I'll tell you, there's a lot of very large, very professional farmers in my county that didn't see $2000 profit on their farms this year. Many of them won't be farmers in the next 5 years if they don't wake up and diversify.

Their is one further benefit from working for your own account as opposed to for others. It's income tax.

When I cut my wood, raise a hog or chicken, Ect for my own use.My labor and value added profit is not taxable. So when I produce for myself I get an automatic 15% profit even if the direct cost is the same. This can and does change most of the above calculations.